What Is the Most Effective Investment Channel in 2015?

Among three traditional investment channels of gold, real estate and securities, investment in gold remains less profitable than other areas because the gold price of Vietnam and of the world has not shown signs of recovery. Therefore, the only remaining real estate and the stock are still in the game. But, which investment channel will be most profitable in 2015 is still a question for both investors and professionals now.Gold market and foreign currencies bleak

At the seminar on the world’s economy and the Vietnamese economy in 2014 and prospects in 2015, organised by Vietnam Prosperity Bank (VP Bank), many participants had analysis on current investment channels regarding gold and savings, real estate, and securities; some of ideas draw great attention of the investors.

According to the representatives of the VP Bank Securities (VPBS), the price of gold has declined sharply during the recent time. This proves that gold is losing its appeal to investors. In the third quarter, 2014, the price of gold fell to 9 percent and in 2015, gold investors are looking to get rid of this investment channel.

Explaining this, the representative of the VPBS said that the US economy is recovering strongly and the European Central Bank interest rates are reduced while the customers of the two largest gold consumption markets pay less attention to gold so the gold price is not as hot as the beginning of 2014.

Besides, the interest rate of savings over time has been continuously adjusted. The profitability of government and bank bonds is currently falling sharply, which makes some currencies devalued and negatively affects investors’ behaviour. The foreign exchange market is more volatile but these fluctuations are changing within a narrow range so according to the experts, the market is stable but it cannot make much more breakthrough, and by the end of the year there may be a slight adjustment.

According to the statistics reported by the VPBS by June, 2014, the VND/USD rate rose quite high, exceeding VND21,300 per dollar, but it’s still far from the ceiling rates. In the context the inflation is kept low, the level of foreign exchange reserves is strong, the State Bank of Vietnam is likely to cool down the market. Therefore, the market and the exchange rate is not a concern at present.

Securities and real estate have a great opportunity

While the markets of gold, savings and dollars are losing their appeal, the stock market and real estate are now regaining attractiveness. The real estate market is very attractive for FDI inflows; with the strong attraction from the FDI inflows in 2014, this market has signs of recovery.

According to the General Statistics Office, in the first 2 months of 2015, the real estate sector has attracted US$111.4 million of foreign investment, accounting for 9.3 percent of total foreign investment in Vietnam and ranked 2nd among business sectors in attracting the most FDI. In 2015, the experts predict that the inflows would flow strongly into the property market.

The low interest rates also will encourage the investors to disburse earlier in the property market and the use of leverage is less risky. In the first two months of the year, there are 58 projects respectively from the previous year licensed with additional capital of US$480.5 million. Therefore, the total registered capital of the new projects and additional capital has reached US$1192.8 million.

The positive signals from the real estate market are making investors more optimistic; the liquidity of the market is increasing, especially for the apartment segment. However, the experts have warned investors about hidden risks of the real estate market because the NPL ratio of banks is still high.

Along with the recovery of the economy, the interest rates are at attractive rate, along with the promotion of investment, the VPBS expects that the real estate will have positive signals in the future.

Along with the growth of the real estate market, the stock market is also drawing the attention of investors when the market supporting measures given in 2014 have taken effect, which help FDI be increased. According to the VPBS, in the next three months, the VN-Index will exceed current levels. The main cause of this increase comes from the bond yields.

Compared with other regional stock markets, the stock price of Vietnam is good; the P/ E is lower than that of the stock market of Bangkok, Jakarta, and the Philippines. This is the basis for the investors to believe that the stock price will regain in the first half of 2015.

According to the evaluation based on current mechanisms and policies, the experts have noted that the stock market and the real estate market are getting more opportunities to generate huge profit for the investors. And what the market creates higher profitability is not easily forecast.